Feds reject Daugaard's partial Medicaid plan

Mar. 5, 2014

Jason Frerichs

Written by

Tim Rave

PIERRE — Republican leaders in South Dakota had hope Monday that the U.S. government would let them cover only half the people federal law calls on South Dakota to add to Medicaid.

On Tuesday, that hope was quashed.

In a conference call late Tuesday afternoon involving legislative leaders from both parties and federal Medicaid chief Cindy Mann, South Dakota officials were told their request for a partial Medicaid expansion would not be allowed.

“Where we had maybe a glimmer of hope through some other channels that they would be willing to look at a compromise that would be good for South Dakota, they apparently decided at levels higher up that they would not be willing to compromise, and it would be full expansion ... take it or leave it,” said call participant Sen. Tim Rave, the Senate Republican leader.

Gov. Dennis Daugaard asked the federal government in late January for permission to expand Medicaid to cover people earning up to 100 percent of the poverty line — $11,670 for an individual or $23,850 for a family of four. About 26,000 uninsured South Dakotans earn less than that.

The Affordable Care Act calls for states to expand Medicaid up to 133 percent of poverty, which is $15,521 for an individual or $31,721 for a family of four. Another 22,000 uninsured South Dakotans earn 100 percent to 133 percent of the poverty line.

Under the Affordable Care Act, those 22,000 people are eligible for heavily subsidized private health insurance through the online health care exchange, but the poorer group of 26,000 cannot — a dilemma created when the U.S. Supreme Court threw out part of the health reform law in 2012.

It’s cheaper for the federal government to insure people through Medicaid than through subsidized insurance. But Medicaid is costlier to states, which pay a portion of the cost — almost nothing at first, then gradually up to 10 percent in 2020.

“They want us to bear the burden of that cost,” Rave said.

South Dakota Democrats, who reached out to President Obama’s administration to urge consideration of Daugaard’s partial expansion proposal, said they were disappointed but not surprised by the answer Tuesday.

(Page 2 of 2)

“I am realistic to look at what they’ve done in other states,” said Sen. Jason Frerichs, the Senate Democratic leader. While a number of states have been given flexibility by the federal government to approach Medicaid expansion differently, none has been allowed to go only partway as Daugaard wants. Additionally, an almost identical request from Daugaard a year ago was rejected. The governor had hoped federal officials would be more receptive this time.

Despite the long odds they face in finding enough Republicans to join the cause, legislative Democrats will present an amendment next week to add Medicaid expansion into the state’s budget.

“It’s not over yet,” Frerichs said. “We’re going to take our case to the people.”

Frerichs said Medicaid expansion, which would bring hundreds of millions of dollars in federal health care spending to South Dakota, makes economic sense for the state while also helping its low-income residents.

Daugaard aide Tony Venhuizen said it’s “disappointing that they’re not willing to show flexibility to the state in this way when they had been so flexible in following the law in so many other ways as they implement it.”

The next step is unclear. States such as Iowa and Arkansas have taken hybrid approaches to expansion that some lawmakers have praised. But Daugaard’s partial expansion proposal had buy-in from South Dakota’s Republican legislators.

“I think there will be discussions about what alternatives, if any, will be pursued, but it’s too early to say,” Venhuizen said.

Rave was more blunt, predicting that nothing will happen on Medicaid expansion before the Legislature disbands March 14.